Marcel Bruehwiler, chief executive officer of UBS AG’s (UBSN) Belgium unit, was charged in Brussels as part of a probe into a multibillion-euro tax fraud, accelerating the latest tax-evasion inquiry facing the Swiss bank.
Bruehwiler was charged with criminal organization, money laundering, illegal practice of the profession of financial intermediary and serious organized fiscal fraud, Brussels prosecutors said in a statement yesterday. They said Bruehwiler, who was released after several hours of questioning, denied the charges. UBS said earlier that it “does not tolerate” activities aimed at tax evasion.
“There will be a lot of pressure on the Belgian judicial and political system to take strong action against the bank” in the wake of international cases from the U.S. to France, Howard Liebman, a tax partner at law firm Jones Day in Brussels, said in a phone interview. “I wouldn’t be surprised if they lose customers in the short term.”
A U.S.-led push resulted last month in Switzerland’s Credit Suisse Group AG (CSGN) becoming the first bank in more than a decade to admit to a crime in a U.S. courtroom. The lender paid $2.6 billion in fines for helping Americans cheat on their taxes. UBS avoided U.S. prosecution in 2009 by admitting it aided tax evasion, paying $780 million and handing over data on 250 accounts. It later disclosed information on about 4,450 more.
Paris prosecutors are also investigating allegations UBS’s French unit helped clients hide their wealth in Swiss accounts. The country’s banking regulators fined Zurich-based UBS 10 million euros ($13.6 million) last year for deficient controls against tax fraud and illegal sales practices. Tax investigators searched its offices in Paris, Lyon and Strasbourg in 2012.
The Belgian case deals with tax-dodging activities started a decade ago, in which UBS employees allegedly targeted rich Belgian clients, according to the Brussels authorities. Police searched Bruehwiler’s home and that of a client, as well as the bank’s offices, officials said.
Bankers encouraged clients to open undeclared accounts in Switzerland, according to a report last month in the magazine M... Belgique, which didn’t say where it got the information. UBS Belgium helped organize the transfer of large amounts of client money to Switzerland, the magazine said.
Information pointing to “serious organized fiscal fraud” was “obtained via very specific accusations of compliance officers who have either left the bank, or been laid off and could no longer stand the modus operandi of UBS,” Brussels prosecutors said. The tax evasion is “estimated at several billion euros.”
Prosecutors said they will continue to analyze the evidence gathered during the searches and further interrogation sessions will follow.
“We conduct our business in full compliance with applicable law and regulations,” Yves Kaufmann, a spokesman for UBS, said in a phone interview yesterday before the decision to charge Bruehwiler. “UBS does not tolerate any activities intended to help its clients circumvent their tax obligations. We fully collaborate with the Belgian authorities,” he said. Kaufmann declined to comment further today.
UBS Belgium’s office in Brussels couldn’t provide contact details for Bruehwiler’s representatives or lawyer.
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